US stocks mixed, falling sharply amid hawkish Fed stance on June hike –

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The Dow fell slightly on Wednesday, while the NASDAQ and S&P 500 ticked higher — U.S. stocks were mixed on Wednesday, as the reversed territory late in the session after the Federal Reserve sent strong signals that it will raise interest rates at a closely-watched meeting next month if economic data continues to improve as expected.

On Wednesday afternoon, the Federal Open Market Committee (FOMC) said in the minutes from its April meeting that it is leaving the possibility open for a June rate hike as the economy continues to strengthen and headwinds from global financial markets continue to recede. Since raising the Federal Funds Rate in December for the first time in seven years, the FOMC has left its benchmark interest rate steady in each of its three meetings this year. The FOMC cited a stable dollar, rising equity prices and a strong labor market as factors for tightening monetary policy, while noting that weak inflation and the potential of a U.K. departure from the European Union could lead to a delay in the first rate hike of 2016. Any rate hikes by the Fed this year are viewed as bearish for equities, as investors pile into U.S. Treasuries and the dollar in order to capitalize on higher yields.

The Dow swung by as much as 200 points before closing at 17,526.62, down 3.36 or 0.02% on the session, while the Composite index gained 0.42 or 0.02% to 2,047.63 on a volatile day of trading. The , meanwhile, gained 23.39 or 0.50% to 4,739.12, amid strong performances from semiconductor and pharmaceutical stocks. On the S&P 500, seven of 10 sectors closed in the read as stocks in the Basic Materials, Energy and Telecommunication industries lagged. Stocks in the Financials sectors led, gaining more than 1% after receiving a pop from the Fed’s hawkish comments.

The top performer on the Dow was JPMorgan Chase & Co (NYSE:), which added 2.50 or 3.57% to 63.86. Financial stocks dominated the Dow, as Goldman Sachs Group Inc (NYSE:) also gained more than 2.5% to 159.22. Top banks on Wall Street use the Federal Funds Rate as a gauge for setting a variety of its own rates for consumer lending and as a means for meeting its own borrowing needs. As a result, the SPDR XLF Financial Sector ETF surged more than 1.7% on the session to 23.27. Since testing the 20 level in mid-February, the Financials sector exchange-traded fund has rallied by more than 15%. The worst performer was Wal-Mart Stores Inc (NYSE:), which fell 2.23 or 3.43% to 62.87.

The biggest gainer on the NASDAQ was Western Digital Corporation (NASDAQ:), which continued to pop after Chinese regulators approved its merger with SanDisk Corporation (NASDAQ:) earlier this week. Upon the completion of the merger, the new company will become one of the world’s largest suppliers of storage devices and solutions. Shares in Western Digital (NASDAQ:) surged 1.70 or 4.63% to 38.45. The worst performer was Dollar Tree Inc (NASDAQ:), which fell 2.35 or 3.03% to 75.16. Dollar Tree (NASDAQ:) shares are relatively flat over the last 52 weeks.

The top performer on the S&P 500 was E-TRADE Financial Corporation (NASDAQ:), which surged 1.47 or 5.84% to 26.65. Financial stocks and regional banks represented the top dozen stocks on the index, each of which soared more than 4% on Wednesday. The worst performer was Hormel Foods Corporation (NYSE:), which slumped 3.33 or 8.58% to 35.47 after announcing the acquisition of Justin’s specialty nut butter brand earlier in the session.

On the New York Stock Exchange, declining issues outnumbered advancing ones by a 1,983-1,073 margin.

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